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Choosing Your Power

by Laura Forlano, Oct 01, 2001
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Most New Yorkers know they can choose their own local, long-distance, mobile phone and Internet service provider. After all, everyone has gotten countless telephone calls from salesmen trying to entice us with discounts and freebies to switch to their service. But, few New Yorkers realize that they can also save money by choosing our own energy company. Despite this, we are continually leaving our lights, air conditioning and computers on all day, and jumping at the sight of our Con Edison bills.

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Just as you pay bills to Verizon, but can get long-distance from AT&T or Sprint, so Con Edison can still deliver your energy even if you get it from someone else. In the past three years, over 100,000 customers have decided to choose alternate energy suppliers. However, this is only a small portion of Con Edison's three million customers in New York City and Westchester County.

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Why haven't more customers chosen their own energy companies? Many of us still do not know what the benefits are. Others may be skeptical of energy companies that they have not heard of. Still others may be reluctant to pay two separate bills depending on their new energy provider's billing system. Others may not be confident in this fairly new program. And many simply do not know about it, because the marketing has not been as aggressive.

Recently, Con Edison launched a new program called "Power Your Way" in order to inform customers of their choices. You should have received a brochure about this program with your recent energy bill. The New York State Department of Public Service also provides detailed information to consumers interested in choosing our own energy services companies (ESCOs). The Public Service Commission encourages the public to participate in the evaluation of this program by offering their views and opinions via their web site or by phone.

The cost of gas and electricity represents more than 50 percent of your utility bill. So, while the delivery of energy stays more or less the same, you might be able to save money by switching to a supplier with pricing or service plans that better meet your needs. For example, energy services companies offer either fixed-rate and variable pricing plans. One company, ECONnergy promises you an annual savings of 10 percent. In addition, some energy companies offer special services to better estimate your gas and electric use.

The Power Your Way program includes over 20 additional energy service companies for homes and almost 30 for businesses, all of which have been approved by the New York State Public Service Commission. When evaluating companies, you should compare the Market Supply Price that they offer for gas and electricity.

Prior to 1996, New York State's regulations did not allow more than one gas supplier in each market. Thus, consumers could not choose among different energy providers. However, in 1996, gas was deregulated, meaning that the government removed the regulations in order to encourage more competition between energy providers. Usually, having more firms in each market decreases the price of the utility because customers will be able to choose the company with the lowest price. Similarly, in 1998, competition was introduced into the electricity market.

In California, deregulation of electricity markets failed miserably and led to soaring power prices. California laws allowed consumers to choose their own and be billed directly by their electricity company. But, it placed a limit on the prices that could be charged. So, when their costs went up, the utility companies nearly went bankrupt. Last month, state utility regulators revoked the right of Californians to choose their own electricity company.

New York State's program differs from California's in that the Public Service Commission has not imposed a price cap. Thus if energy costs rise, your bill will go up too. This should help to safeguard against draining energy companies of cash and credit when gas and electric costs increase.

If you choose a new energy provider, Con Edison will still deliver your energy and provide emergency service. But, Con Edison has sold most of its power plants in order to help encourage competition, so it no longer produces the energy it delivers to your home or business. Depending on the company you choose, your new bill may include charges from Con Edison or you may receive two bills, one for energy supply and one for delivery. In fact, you could end up receiving three separate bills, one for gas, one for electric and one for delivery.

As the autumn weather gets cooler, reminding us to take out our wool sweaters and turn up the heat, New Yorkers may want to take some time out to scrutinize our energy bills. In this tight economy, even a small monthly savings on gas and electric may help cut costs in the long run.

Laura Forlano is a doctoral student studying communication technology policy at Columbia University.


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